TBPN - RSI Is Closer Than People Think, Per Tae Kim

Episode Date: July 29, 2026

This is our full interview with Tae Kim.We discussed why the AI trade is being misunderstood, why Kimi and better open-weight models could increase compute demand instead of reducing it, Meta's AI spending, NVIDIA's open-weight strategy, the race toward RSI, why data center fears are overblown, AMD's expanding AI market forecast, the future of agentic AI, NVIDIA's CUDA moat, and much more.TBPN is made possible by:Ramp - https://ramp.comPublic - https://public.comCisco - https://www.cisco.comConsole - https://www.console.comCrowdStrike - https://www.crowdstrike.comFigma - https://www.figma.comMongoDB - https://www.mongodb.comNYSE - https://www.nyse.comRailway - https://railway.comShopify - https://www.shopify.com/Codex - http://openAI.com/codexSign up for TBPN’s daily newsletter at TBPN.comFollow TBPN:https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://www.youtube.com/@TBPNLive

We have Tay Kim in the waiting room. Let's bring him in to the TBPN Ultrodome. Tay, how you doing? Hey, guys, doing great. What's going on? So tell me, last time you were on the show, you bottom ticked it? What's going on? I think I made the bullish call on CPU's memory and Nvidia. Invidia is up like 5, 10%, but the CPU names have still doubled even after this big drawdown.

And the HBM names are up 100%. So I'm hoping that, you know, it's the same thing again. I come on here and stop to go up again. Yeah, ideally we could have like an emergency reserve of take care of appearances. So if the market is ever down, we just a strategic reserve. We call you up, you jump on. It was funny because it was literally the exact bottle. That's amazing.

It went exponential after that. The Tay Kim effect. So where are we right now with the level of FUD, the level of downward pressure, on the AI trade broadly, the chips, the semi-trade, like reset for us on like where sentiment is and then we can work through the different pieces of counter examples. So I think sentiment's very negative. We kind of had this huge parabolic up move to last few months and likely a lot of retail and hedge funds piled it in and we were seeing this unwind down.

I think the first, a big part of it was Iran war getting worse. Every time we had the first ceasefire in negotiations, stocks started taking off right after that. And then when we had the actual ceasefire, we had a follow-through. And then as soon as Trump started bombing Iran again, you know, chip stocks have kind of plummeted in the last two, three weeks. And then now we're seeing just, you know, back to the old pattern of media and the viral hot takes spreading a lot of fud. I think we saw earlier this month, I think Reuters quoted like Zuckerberg about agentic AI. They took it out of context.

And then every media person was with the hot take that this met meta was seeing bad returns and they're going to cut a KAPX. And then we had leaks right after that saying that it looks like META is going to raise KAPX. So we're seeing a lot of this hot take flood yesterday. I think we had a flurry of stuff that scared people. the Wall Street Journal Vendor Financing article that we'll see, we'll see what happens with that. We have CMXT IPO in China and everyone freaked out over that.

We have the information article on ASML. We could go through each one. And then the Kimmy thing, it's obviously a big thing. Yeah, we'll definitely get there. And I want to talk about open source and Nvidia's strategy there, obviously. Starting with the Mark Zuckerberg news in Roiders, this was July 2nd. Metaz Zuckerberg says AI agent tech progressing slower. than expected. Zuckerberg added that the company's reorganization that included major job cuts was not

as clean as it could have been. Zuckerberg and other meta executives have been seeking to moderate some of the organizational changes introduced this year. And they said that the trajectory of agentic development over the last four months hasn't really accelerated in the way we expected. The company's bets on new structure haven't come to fruition yet. And so people were sort of reading this as maybe meta is going to pull back, but then it felt like the response was extremely quick with, with Bos going on a podcast and Alex Wang sharing a whole bunch of progress across a few different models and data points. And then a semi-analysis wrote a whole bull case for MSL talking about how they have compute and also they have more of like the internal structural alignment to sort of properly yokey below in the AI era, if I'm boiling it down as brutally as possible. Just because with Google, there's always this debate between, oh, do you sell the TPUs or do you

sell the cloud competitive? Do you have it in the product? Whereas Mark Zuckerberg's able to sort of like go all in on this new idea. And so maybe there's more, more glimmers of hope there. But what else have you been tracking downstream of meta's ambitions? Well, I mean, they've been very upfront that they're investing heavily in AI. Alexander Wang is tweeting. multiple times every few weeks

that they're going full force they're going to redo open source AI models I think he said that the YC event over the weekend and it's I mean if you actually look at and then Reuters came out I think with an article saying that they're actually going to raise CAPEX dramatically

this year and next year so all that kind of fear that that quote about Atlantic AI from the town hall that kind of like spooked the market for a few days it kind of it was completely false. Yeah, it feels like it's a comms air because the language that's been coming out of meta

has been a little bit like AI is going to replace our employees and it feels like it'd be much better for them to come to the market with a message of we're going on the offensive. Like we're a hyperscalor. To be fair, that was the internal town hall. They didn't mean to leak it. And we're just leaked that one quote and put out, put out the headline before they're Yeah, it's interesting, like, meta, did meta basically go through like an eight-year period where, like, internal town halls didn't instantly leak? I think everything leaked always.

I think everything's been, I know, but there was a period where, like, the sort of attention of the media was way, way, way less on, like, what meta was doing internally relative to the 2010s. And all of that attention just went to the labs, right? Yeah, yeah, yeah, no, that makes sense. Yeah, I guess the question is like the question that I keep coming back to is like where is their revenue ramp? Where is their AI revenue going to ramp and when? Right? Because as you just keep- Super would say ads.

Like the ads, like the AI has- Yeah. And that's always, that's always been my view too. But when you're continuing to ramp CAPEX with and saying like we're going all in on a gentic and we're building a harness. and we're building a harness, and we're also going to do open source. And it's like, well, what is the strategy? Sure. Like, where is going to take you to a billion dollars of like pure AI product revenue

or just API revenue, and then to five and ten, and what's going to allow you to like justify the spend other than, I think the market would love if they just said, yeah, we actually need all these GPUs because we can actually be 10 times. We're already good at ads. We can be 10 times better. and that's where we're going to get the ROI on all of this CAPEX. Well, they're definitely getting ROI on that.

The market is worried about all those extra CAPX on the, they're going for the frontier AI model race again. And they had to reset. A lot of people left and now Wang hired a ton of people. And we'll see what happens. It's going to take time. It's going to take six to 12 months before we'll see any more progress. But that first model that came out a few weeks ago was a lot better than people.

It wasn't the frontier, but it was much better than what people expected. Yeah, yeah. So how have you been processing the NVIDIA letter around open source and all the back and forth, all the people jumping on, the companies that have been staying back? I think it's been very impressive what they've been, they've basically united the entire tech industry against Anthropic in the last three, four days. 18 trillion in market cap has signed on. Last time I checked across. I mean, Google took a little time.

Amazon signed on eventually. Oh, they did? Yeah. He signed on yesterday. They tweeted out. Interesting. I think Apple is still the holdout. Apple's the one, which is kind of strange because they're the one that would most benefit from open source, open weight models being, you know, more available, I would think.

But I don't know what Apple. But, I mean, they pretty much got the whole tech industry to, kind of corner anthropic in their position. Yeah. Open AI signed on. Yeah. What did you think of Jerry? Obviously, Invidia's a phrase.

Yeah, I don't know. I don't know how if, I don't know if they're really, I don't read it as being like cornered by any means, right? Well, Jensen is on the record that, you know, he said, I think, to Bloomberg, that there was a rising sentiment that something was going to happen on the, on the regulation front. Oh. At White House or whatever.

Sure. So this was last week you had at least four people in the admin say we're not against open weights. We're against distillation. And at least I was reading into that of some type of regulatory action around open weights and then positioning it as we're targeting. This is like we're hitting. Yesterday, yeah. About, you know, pushback and restrictions. And he's done doing it under the safety umbrella. But definitely. Definitely, Microsoft and Biddy are worried that the White House or Congress is going to do something on this front. Yeah. That's why they took it. Yeah, it seems very reasonable that he would have no problem with like Gemma or Lama or any of the open source from like American hyperscalers where if you find out that they're distilling, you just walk across the street and sue them. And also these big companies have huge, huge, I mean, they have safety teams, but also just like huge incentives to not have a safety incident happen on their walk. because you're trying to like catch up to the frontier and then all of a sudden you have a safety incident that's going to be really bad for your overall brand and you have a different business to protect whether it's social networking or Google search if all of a sudden the Gemma model winds up being a thorn in someone's side for a cybersecurity reason or a bio reason that would be really really bad but a foreign company that is just like hurling it over here can kind of just be like you guys deal with the consequences potentially so

So I think that's what Dario is worried about. What about the overall idea of like where it feels like we're sort of replaying the deep seek moment, open source is going to reduce cost. And so that's a reason to pull back on the AI trade overall. How have you processed that? It's almost a perfect catalog. People are worried about Kimi. But when you actually read the technical paper and their blog posts, this is not a tiny efficient model.

this is 2.8 trillion parameters. It's going to require a ton of compute to serve. I mean, we saw it the first day they put it out, but their servers got slammed. Even in the blog post, they say it's best run on a kind of a server with 64 GPUs. So big super clusters that network well, and that's perfectly runs great on Nvidia.

And if you remember during the whole DeepSeek thing about a year or so ago, the market freaked out that, you know, deep SQL was so efficient. that will lead to a compute glut. But DeepSeek was the example of the reasoning model that actually, it was the opposite. It created a ton of demand. And I think the same thing that's going to happen with Kimi, where when you have more

capable models that come out, people find uses for them. And right now, just like last year when reasoning models took off, agenic AI and agents are taking off right now. And the market is kind of like not realizing that. Because right now, just like last year when reasoning models were taking off, right now, Agendic AI is taking off. And the next six, nine months are going to be bigger than anyone believes. And Sam is on the record.

Sam is on the record over the weekend. At the YC thing, again, like, people don't, I don't know why people don't listen to you. It's on YouTube. Yeah. That the next six months, it's going to be much more dramatically better for AI than the last two years in terms of advances capabilities. And I heard you say RSI before. I think it's going to be RSI. People inside Open AI and definitely anthropic, anthropic put a blog post on this.

RSI, I think, is a lot closer than people think. And if RSI actually happens in the next three, six, nine months, that's going to soak up insane amount of commute. I mean, we have this exponential ramp for reasoning, exponential ramp forogenic. And then if RSI actually happens, and I think it sounds like both frontier labs think it's going to happen very soon, that's going to soak up an unbelievable amount of compute as the AI. models, you know, use more compute to self-develop and improve. And I think that's one thing that people are missing that both anthropic and opening air kind of winking that, oh, it's happening.

Anytime I tweet something on RSI, all these frontier AI researchers like by tweet. So I think that's good. What is your sort of framework around compute hoarding? Because certainly it is, it has been happening when you look at, when you look at you know, like going back to the meta example, right? They're not selling compute yet. They're maybe curious about it or exploring some deals. They have all this compute and they're betting on their own ability to create the capability

that will have enough demand to justify that. Do you just think there's so much demand overall that it just, you know, even if there's hoarding, it just will leak out and it's okay? There's so much demand overall. I mean, the SK-Hinex executives said during their IPO run that their customers are asking five to six times more than they're able to serve. And they're going to double capacity over the next five years, they said. And their customers, and I'm going to assume it sounded like Jensen, are asking for five to six times more than they're able to build. So there's overwhelming demand.

You guys were at the advanced AI A&D event. Lisa Sue raised her genetic CPU forecast just three months ago it was $120 billion for 2030. Three months later they raised it to $220 billion. Like she doesn't do that.

She doesn't do that. You have that just on the rest. I've got that ready. I can do whatever. I mean, like Well, I just love this chart because he called it perfectly.

He actually did. It's crazy. CEOs don't, you know, raise their tans by these multiples in a few months, if they're not seeing insane demand coming in. Especially not public CEOs who are serious business leaders who've been running like non-meam stocks for decades and are like serious people. Everyone's freaking out that this is let the dot-com bubble all over again. But what if these hyperscalor GPU cloud businesses are amazing businesses?

Like Morgan Stanley says if you do inference, it's 60 to 80% profit margins, right? These are amazingly profitable businesses as long as we keep growing the next few years. And again, just like last year, we're on this exponential run right now over the next two quarters, and the market isn't seeing that. Everyone's freaking out that, oh, no, we're spending too much. And even Sam Altman podcast came out today, and another podcast is out. Sam is out there. He said that he regretted pulling back on the compute purchases. They made a mistake by not putting the pedal to the metal because now things are taking off again.

So, like, Amazon, the CEO in April, if everyone read his annual letter, Andy Jesse wrote. He talks about how free cash flow works. We're not betting $200 billion on a hunch. We see the demand. We know it's going to be insanely profitable and free cash flow positive in the medium to long term. So that's why you're investing $200 billion now. And in a year or two, we're going to see insane amounts of free cash flow, the thing that people are worried about right now. It takes time to build out these data centers and fabs.

And you bet now to bring that in a couple years. Like if you see free cash flow, that assumes that like the revenues have to catch up and then the CAPEX can't grow more exponentially. And so that means you have to see some sort of plateauing. Maybe it's at the end of the chart. Maybe it's this 20, 30 range. But there is a different world of just, like, continued growth forever. And then we sort of like run out of money. The pushback I have there is that's a static view, right?

If they don't grow revenue for the next three years, yes, you can't do that. But they're growing, Azure is growing 40%. Google Cloud is going 80%. Yeah. And Amazon's growing high double digits. So if revenue is, growing 40 to 80% this year, next year, and the year after, that's more revenue you have. That's more operating cash flow you have to invest.

Right? So that's what people are missing. Yeah. And if the data centers you're building now, you're spending all this now, generates unbelievable free cash flow in 12 to 18 months because, you know, this agency AI is actually aging and re-architecting all the workflows inside companies. and you need to do the Agentic AI coding agents to make your product better. Because if you don't, if you don't iterate 100 different iterations for your product in R&D,

if you don't do AI, just like AT&T is doing at the GenC Advancing AI at AMD, he's talked about they're putting 100 Gen AI models into production. They're burning a trillion tokens a month and then that's growing double digit. The reason why they're doing that is because by using Agentic AI, you're providing a better customer service, you have a better product warranty, and you're helping your companies make better products and services. And if you don't incorporate AI into your company, Verizon,

your other company is going to do, it's going to incorporate AI and then disrupt you, and then you lose all your revenue. So everyone's worried the ROI. ROI is important, but you also need return on revenue because if you don't use AI, your rival is going to use AI to beat you in the market. Yeah, yeah, no, I think the diffusion story is still, even though we got like sort of jitters by the token maxing thing, just the actual usage of AI across companies is still pretty limited in terms of the amount of people that are using it, the time that those people are using it.

Like, there definitely is a San Francisco bubble of startups where everyone is using AI a lot. But if you just walk into a normal business, a lot of people are like, yeah, I got to check that out, which is a crazy place to be. Let me give you some context here. Yeah, Ara Karazian, Jared Sleeper, over and X was saying, enterprise adoption, disparity remains enormous. And he cited Ara saying usage would 100x if every company adopted AI to the degree of the most advanced companies. So there's a small group of companies that are...

People forget in the ramp data, like adopting AI can mean like having a chat GPT pro account for someone, which is like not exactly the same as like using codex and like coding agents and stuff like it's important i think that you know if i have someone on my team i want them to be able to go and do a deep research report but uh that's like table stakes the question is like are you actually speeding up anything that's repetitive in your job and uh that diffusion is just starting to take hold so so the total market size in terms of IT and knowledge management in corporations it's about six trillion dollars right a year the two main frontier AI model companies open AI and anthropic I'm gonna say I think this is roughly accurate or doing a hundred

twenty billion dollars combined in ARR you know well I can't that could go to 200 300 400 billion in the next year or two I mean they're the growing at exponential rates yeah when we're taking off and if the market is six trillion dollars right why can't they grow to 200 300 400 billion in next couple years I mean it's it's Like just do a little logic and rational deduction. Yeah. This is definitely possible. And it's happening right now and it's accelerating.

And people aren't, you know, they're just taking, you know, these big headlines where we had this, you know, 50 billion dollars for financial times. And we find out it's over 30 years. It's like on the homepage. Yeah, yeah. Okay. I wanted to ask you about this. NVIDIA revealed this tenant for $50 billion data center that will use its chips. Explain what is actually going on here?

So the Financial Times put on their homepage today, the Nvidia is going to backstop a lease for a data center of Texas with $50 billion. And I saw that. I was like, oh, that doesn't sound good. Yeah. No, it literally sounds like they're buying their own chips. Like, it sounds like the most bad thing you could do. Yes. Then you actually read the article, like halfway down the article.

It's like a 15-year lease. And it's only $50 billion if they renew the lease. after 15 years. So it's like over 30 years if they renew it. Then if you think about that, you're like, wait a minute, 50 billion divided by 30s if they renew it. Okay. Yeah. And VVVVVDIA's 15-year lease commitment for the Texas site is worth basically 20 billion. And renewal options would take the total value to 50 billion over 30 years according to Hutt 8. Okay. What do you think they're, what are their plans for the site? Is this they are going to have some like what do you expect them so my my point is this is a billion you know whatever a billion

or two billion dollars a year right it's a non-story but it's a it's a big headline since they should headline on the home page yeah and also it's it's not that it's it's not like you're taking a two billion dollar loss every year it's you are the tenant and then you are also renting that out so hopefully you're making profit it's a rounding error it's like you know they're doing 300 20 billion run rate a year now that's going to go to 400, 500 billion next year. We're talking about something that might be a billion. You know, like, this is not a story, but this is how people run with the sensationalized headlines and people panic and freak out.

I think they just wanted to say the biggest number. That's exactly the point. And we're going to see what happens with this Wall Street Journal article. Both Open AI and VINDA are not commenting so far. We'll see. But take us through the rumor. We have to wait. Rumor, well, it's not rumor.

It's the Wall Street Journal and other people reporting that. Yeah, Nvidia is in talks with OpenAI. It's a backstop, soft bank, up to 250 billion, you know, we don't know the details. And I don't want to speculate and comment, but let's actually see the details before we, I think the market had a really big negative reaction yesterday to this story. Because everyone, I mean, Jim Kramer was telling his audience, like, sell everything at the open today. because AI and data centers.com, you know, it was insane.

It's just let's see the actual deal and the metrics and the numbers before we panic and freak out. Yeah. Yeah. Yeah. Yeah. That makes sense. So, yeah. Honestly, when you say freak out and sell everything, sell your dollars, sell your house, sell your stocks, then I'll freak out. But until then, Tay, I feel, I feel okay. I mean, I just see the fundamentals. I see the CEO of A&D expanding her TAM, you know, dramatically over the last three months. I see RSI under a horizon, like every AI researcher is like, oh, my God, this is going to happen. We have to get there sooner. And then I see, you know, the obvious use case of agenic AI where you have to re-architect your workflows internally. Every company has to do this.

So everything is taking off. You see when the president of Korea came to San Francisco area last week. You know, they had like a day in the valley. Instantly, Enidia CEO, Jensen Huang, Rockcom CEO, Haktan, Dario, you know, Sam Altman are there, right? You know, do a little logic deduction. Why are they there like crazy? Because they need HBM memory and they're dying to have it.

So if you think about that, that means there's insane demand and HBM memory is in shortage. There's tremendous demand for it, right? Talk about the, oh, sorry, talk about the NVIDIA-Cuda mode. It feels like a big piece of AMD's advanced AI event was maybe the Kuda mode isn't as much of an issue anymore in the age of agentic AI. You can have an AI agent, write you the software that you need to use any chip, and that creates less pricing power for Nvidia. But there's another world where you're not really, like, Nvidia doesn't necessarily need a moat because everything's just growing so fast that they're still growing.

But how have you interpreted the processing of like the potential death of the Kudamot? So AMD's audit. Kimmy wrote like a couple paragraphs in their blog post about how they created a, the GPU kernel, all that, so everyone, you know, get scared or whatever. It's like, we'll see what it's like in real life. You know, this is just, you know, AMD is incentivized to say, oh, Kuda's not a problem anymore. Kuda's been a tremendous moat, and I think it continues to be a moat. And the reason why is it's super reliable.

All the bugs have been optimized and fixed. And that comes from hitting the software, you know, millions of times and billions of times, right? Like you don't know if you use Cloud Code or Kimmy that what they figure out using their training data is going to work in the real world, right? They could talk about one little piece that does well. Let's see how it actually works. But in video's big mode is its scale, it's co-design of actually working through the networking, the CPU, the GPU, and how everything works together. And the other big thing is their balance sheet and their ability. to get supply commitments from, you know, I think I said this before,

optical startups are like upset because NVIDIA secured all the supply for all the optical components. Same thing with TSMC wafer, same thing with HBM memory. So, Nvidia is using their size and guerrilla and being able to prepay and get components that are in shortage. So they've become the dominant, you know, over the next year or two, you're going to see NVIDIA able to add tons of revenue because they were able to, lock up all the supply components. That's another thing that people don't really talk about, is their supply chain and their ability to work with partners

and secure component inventory. Is there still energy fud that we would run into an energy bottleneck before we run into a chip bottleneck? So Jensen said this last week on the Bloomberg interview, that there are a lot of bottlenecks, including data center shell, power, and all those things, components, energy, whatever. So all those things, it sounds really bad, right?

And then right after that, he said, I think the chip industry has enough supply to double their revenue every year. Basically, implying, Nvidia has enough supply for energy and all that stuff. No one is pricing that in. So everyone talks about bottlenecks. Nvidia CEO just basically told you on Friday that they have enough supply chain and all the bottleneck stuff to double revenue every year. No one, you know,

Nvidia's revenue estimates for next year are a lot lower than double, I'll tell you that. Do you think the market prices in just how much of almost every important AI company in every category Nvidia actually owns? Like it feels like every single,

like we're constantly focused on who's going to raise CAPEX next and where is this quarter coming in. And it feels like in two or three years, people will look at Nvidia's balance sheet and be like, wait, they have what I imagine then will be, you know,

could end up being a trillion dollar plus of just like ownership and all of these great companies which again just goes back to the advantages of that early scale while they're, you know, while all these companies are trying to compete away Nvidia's margins and all these

different things, they've been able to accumulate, again, positions in all of these incredible companies. I mean, we saw the SSI news yesterday is a great example of that. But how do you look, how do you see it? So I think look at Jensen's history and investing in these companies in Corweed and see how much money they made. They just bought stake in the optical companies, momentum and coherent.

Jensen is enabling the future because he sees this overwhelming title of demand, and he needs these companies to be able to build up their supply chain and to give supplies and chips to Nvidia, so they actually ramp very hard. Everyone's freaking out that this is vendor financing. What if hyperscale GPU Cloud is so profitable, and these companies need capital to build up that supply so they can serve the GPU Cloud services over the next year or two? Maybe Jensen sees that coming, like he did with all these other companies like CoreWeave,

and that's why he's investing in these companies to be able to expand their ability to make the components the industry needs. So I think you're exactly right. In a year, two, three years, Nvidia's going to have like all these stakes in these companies, and it's going to look like he was a good investor because he has been in the past. I mean, the man can buy a leather jacket for like five grand and sell it for a million dollars. I don't know what else you need to see. I mean, think about

Are you the secret bidder? Did you win that? No. I got to get you a jacket. The real question is, how long until someone distills a jacket and open sources it, you can get a dupe of a Jensen jacket for two bucks. That's what I want. Anyway, thank you so much for coming on the show.

Jordy, you got anything else? This was great. Yeah, this is great. Always pleasure. Thanks for putting up with all of our jokes. Hopefully, this becomes the lucky charm for the markets. Yes, I agree. I agree.

I agree. The bottom is in. Great to see you, Tay. Have a good rest of the week.